SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 15915 / September 30, 1998
SECURITIES AND EXCHANGE COMMISSION v. RITA K. SAVLA, Civil Action
No. 98-CV-119 84 (EFH) (D. Mass.)
FORMER H.J. MEYERS BROKER SETTLES FRAUD CHARGES
The Commission announced that it filed a complaint today against
Rita K. Savla of Toledo, Ohio, a former broker at the Boston
office of H.J. Meyers & Co., Inc., for engaging in a free-riding
scheme which resulted in trading losses of approximately
$162,000. Free-riding is a pattern of purchasing securities in
accounts in which there were not sufficient funds to pay for the
securities and which had no means of paying for the shares except
through the sale of the same shares. Without admitting or
denying the allegations in the Commission's Complaint, Savla has
agreed to be permanently enjoined from violating the antifraud
and credit extension provisions of the federal securities laws.
The Commission also sought disgorgement but it has been waived in
view of Savla's demonstrated financial inability to pay. Savla
has also agreed to be barred from the securities industry.
The Complaint alleges that during June and July 1996, Savla
purchased 58,000 shares of Palomar Medical Technologies, Inc.
stock and 18,000 shares of Atmel Corporation stock in nominee
accounts at a cost of more than $1.25 million, without any
intention or ability to pay for the purchases. Savla lied about
the nominees' financial, employment and investment background,
and created the false impression that they could afford to
purchase large amounts of securities on a cash basis. The free-
riding scheme collapsed when, after several successful free
rides, the price of the stock she purchased dropped before it
could be sold, leaving approximately $162,000 in losses.
In a related matter, the Commission instituted administrative and
cease and desist proceedings against H.J. Meyers and Tobin J.
Senefeld of Crestwood, Kentucky, the former branch manager of
H.J. Meyers' Boston branch office and Savla's supervisor. The
Commission's Order alleges that when Savla told Senefeld about
her scheme and the profits that she had made, he participated in
the free-riding scheme rather than stopping it. The Commission's
Order alleges that Senefeld purchased an additional 30,000 shares
of stock in nominee accounts at a cost of $364,825 without any
intention or ability to pay for the purchases. Senefeld's
trading left customer accounts with approximately $49,000 in
losses.
The Commission charged H.J. Meyers with failing reasonably to
supervise Savla and Senefeld. The Order alleges that H.J. Meyers
received indications of possible free-riding in its Boston branch
office but failed to investigate or take any action. The
Commission also charged H.J. Meyers with failing to cancel or
liquidate on a timely basis purchases of stock in accounts used
by Savla and Senefeld for free-riding.